Trick or Treo? Handspring Knocks on Carriers Doors

By eweek  |  Posted 2003-04-25

Trick or Treo? Handspring Knocks on Carriers Doors

When Handspring first came out of stealth mode. I was a bit disappointed that its first product fell so close to the Palm tree. My guess was that the company was going to get involved in the education market. There seemed to me to be a vacuum left by Apple Computers eMate, and the industry was ready for a new kind of portable "education computer."

But, as often happens in the PC industry, the laws of volume took over, and consumer laptops like the Inspiron and iBook have become cheap enough that they have filled that void. (Curiously enough, years after Handsprings move, educational computing company AlphaSmart—makers of the word-processing wonder AlphaSmart 3000—released a Palm OS-based computer called Dana.)

While the Visor was a nice-enough product, it was bound to run out of steam. Coming in an assortment of fruity colors, it looked nice next to an iMac, added USB so it could connect to one and offered a few improvements over Palms built-in applications. Rah. It also included a proprietary slot called Springboard. This "revolution" was a lot like CompactFlash, only bigger and with no industry support.

Springboard modules dribbled into the market. Handspring was criticized for not doing enough to encourage Springboard development, but it wouldnt have mattered. Several of the modules cost more than the Visor itself. Furthermore—from IBMs MCA to Apples ADB to Bes GeekPort—the recent history of computing shows quite clearly that companies that attempt to differentiate on proprietary interfaces generally have a track record thats spottier than 101 Dalmations. Handspring beat Palm to the punch with a color model (the Visor Prism), but lagged on a slim one (the Visor Edge).

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Enter Brandzilla

By then, Sony had entered the game, and Handspring was simply being outspent, outdesigned and outsold. Handspring pronounced the PDA market dead and announced that it would henceforth produce only "communicators." (Dont tell anyone, but those are just wireless PDAs.) Now Handspring was going from a market with just two strong brands to one with several—Nokia, Motorola, Samung, Sanyo, Ericsson, not to mention the carriers themselves—and in a market that was far more mature. How could it compete?

Pretty darn well, it turned out. The Treo was not quite a home run, but as its name implied, it was a solid triple; it certainly should earn a place in mobile history as the first usable hybrid device. Handspring brilliantly borrowed from the industrial design of Nextel phones of the day in order to gain phone "cred"; previous efforts like those from Qualcomm looked like Palm IIIs with flip-out microphones.

Handspring also included a keyboard that, while stepping over the boundary of usability for my fleshy fingers, informed the Palm world of what Blackberry users already knew – thumbboards kick Graffitis putt. (Sorry, that was a handwriting-recognition error.) The Treo was also surprisingly small and light, had adequate memory, and gained color before too long.

It was also the first Palm OS-based phone to be available in either CDMA or GSM versions. Apart from the keyboard, and a learning curve that included too many obscure keyboard shortcuts for my taste, the only nice-to-haves it was missing were a battery that outlived the average character on "24" and Bluetooth, which was probably still a bit too immature at the time.

Handspring had successfully transitioned to a cell phone company in terms of product but not in terms of product development. The next step in the evolution of the Treo is due this fall. It may well address the shortcomings of the last Treo, the fundamentals of which were sound, or break out in an entirely new industrial design, like the Nokia 6800. Given Sprint PCSs imaging push, it will likely have an integrated camera.

But technology wont be the main success factor for the next Treo. Having learned the lesson of competing against better-funded giants, Handsprings getting smarter. In a sense, it is learning that its not what you know, but whom.

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Sprint Toward Integration

Instead of just designing cool products and throwing them out into the market, Handspring will now work with carriers in two ways. "Tier 1" carriers—from which the company expects it will derive most of its revenue—will have access to all kinds of preferential treatment, including co-development, product customization, systems integration, and joint marketing and sales.

Handspring cites its Sprint PCS alliance as a model for this kind of relationship, and it lists a slew of special efforts the company made to accommodate the CDMA carrier, including e-mail integration, IT integration, pre-loading and testing of Sprint software, and over-the-air provisioning and updates. (Rumor has it that Handspring President and co-founder Ed Colligan also had to cook breakfast for Sprint Chairman Bill Esrey twice a month.) Handspring, while admitting that carriers are not used to working so closely with handset manufacturers in this way, makes a strong case about why this sort of relationship will become more important. As the market turns to data, the complexities multiply exponentially.

One danger of this strategy is that carriers misread the market at least as often as any other company. And if Handspring relies too heavily on their judgment, they risk producing unappealing product. However, this probably isnt too great an issue. Sprint PCS has been among the most aggressive of the carriers in marketing handsets branded under its own sobriquet. If it wants to create something goofy, it has partners to do so.

Plus, Handspring has some experience in tangoing with strongly branded partners such as Palm and has come away with a bit of brand recognition. I guess all those Visor billboards were worth something after all.

To win a preferred place in a lineup of what will increasingly become data-centric handsets, Handspring is willing to stand on its head for carriers. Clearly, the company cant afford to invest such time and effort with every spectrum slinger. Its a strategy that will come down more to process and execution than innovative technology, but one where Handsprings focus may for the first time give it a sustainable advantage.

What do you think of Handsprings strategy? Will it leap forward or is it headed for a tumble? E-mail me.

Wireless Supersite Editor Ross Rubin is a senior analyst at eMarketer. He has researched wireless communications since 1994 and has been covering technology since 1989.

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